Since TV advertising began its downward spiral, broadcasters have been forced to look elsewhere to capture lost revenue. Over the past few years it’s been a series of peaks and troughs as other platforms, such as the internet, have yielded more success. Signs of market recovery in 2010 proved all was not lost, but it’s unlikely to regain its former glory, as reflected in 2007, when net revenue totalled £3.6 billion. According to a ‘doom and gloom’ report from Ofcom, television advertising revenue is likely to fall even further, by as much as 83%, to £520 million by 2020. As we enter an increasingly multi-platform market, there is no reason why broadcasters can’t utilise other channels to make up this deficit.
Hot topic ‘du jour’ is the feasibility of broadcasters charging viewers for their content in the form of micropayments. ITV recently announced the imminent launch of a micropayment scheme for its on-demand player. The trial will start in January 2012 and will test what kind of content viewers are willing to pay for, which will be key in determining how successful the venture is. Viewers are unlikely to pay for shows they are able to watch for free on terrestrial TV, so this is an opportunity for experimentation. Why not charge for new and unseen content? Perhaps the first episode of a new drama, before free-to-air transmission? There is also potential to charge for exclusive content associated with big shows such as ‘The X Factor’, along the lines of the supplementary extras on a DVD. It would be one way of utilising all that excess audition footage, and the lure of it being exclusive may be enough for viewers to part with their cash, particularly if payments are kept low.
MTV currently processes micropayments through its site, offering an all-access pass to full-length episodes of its shows at either £2 per day or £3 per week. They have also enabled payment and viewing via mobile, which could be the key to encouraging uptake for the terrestrial broadcasters. Viewers will be less keen to pay for content on a platform that has always been ‘free’, but they may be more willing to pay if the content is downloadable and viewed via a smartphone or tablet. Much in the way that TV shows are bought and downloaded from Apple, onto an iPod.
The trick for broadcasters will be building relationships and amassing data on their viewers in order to encourage loyalty and subsequently to part with their money. Broadcasters will look to produce more content that encourages interaction and can be played across accompanying screens such as tablets and smartphones. With their new venture, 4D, Channel 4 are attempting to establish a direct relationship with viewers in order to personalise the experience of watching television. They will be able to create a cross-platform account, which sets their preferences, creates playlists and tracks viewing history. Although Channel 4 have stated it is more about an exchange of mutually beneficial information rather than being financially driven, it could tie in nicely with the concept of targeted advertising. With an overload of advertising information across all platforms, including VOD, there is a danger that viewers will suffer fatigue and begin to ‘switch off’. Ads tailored to viewing habits, and the viewer themselves, have more chance of success plus there is an opportunity to make advertising more attractive through interactivity and augmented reality; areas that have yet to be fully tapped.
There is still plenty of mileage in social media through its increasing influence on TV viewing. Some pay-tv operators have begun creating their own social TV destinations, allowing subscribers to ‘check-in’ and be rewarded for interacting with their shows. Offering up tokens for redemption against renting a free movie for example, is a fun method of maintaining engagement and possibly luring in new subscribers.
There has been much discussion around methods of payment, simplicity of process and potential tariffs but no single solution appearing to dominate. With differing payment processes available across a range of platforms including credit cards, e-commerce businesses such as PayPal and emerging technologies such as near field communication, the right payment method will be crucial. With Facebook Credits becoming a popular and versatile way to pay for goods, it could add another option to the mix. Whichever route TV broadcasters decide to go, it will be imperative that the process is swift, intuitive and uncomplicated.